OPERATIONS
INSURANCE
Why Insurance Shouldn’t Be an Afterthought WITH COMPREHENSIVE AND EFFECTIVE COVERAGE, YOU CAN BE CONFIDENT YOUR INVESTMENT HAS THE PROPER PROTECTION FROM ANY UNEXPECTED EVENTS OR LOSSES.
By Laura Olson
W hen you invest in a rental
It’s also necessary to research the claims history of the property. Getting coverage at a reasonable rate can be difficult if the previous owner had frequent or costly claims. Insurance carriers may view prop- erties with a history of claim activity as a greater risk, resulting in higher premiums or denial of coverage. To avoid these issues, look closely at all aspects of a property before making an offer. Inspect the prop- erty’s physical features, including its age and condition. Confirming a property complies with local requirements and regulations helps to prevent potential problems with insurers once the sale is complete.
ceilings, floors, and roofs). In apart - ment buildings, property damage coverage could include fixtures such as built-in appliances and cabinets.
property, it’s easy to focus on
the potential for profit without considering the risks. But choosing the right landlord insurance policy should be as much of a priority as selecting the perfect investment property. Even with a reliable tenant and an ideal location, not having the right coverage can make or break you if misfortune strikes. Without proper insurance coverage, landlords are at risk of substantial losses financially that can easily compromise their invest- ments. The good news is there’s an easy solution: Investigate insurance options at the start of your venture. WHEN TO START SHOPPING FOR INSURANCE Shopping for insurance should be part of your due diligence process from the very beginning when you invest in a rental property. Consider the potential risks to your investment, such as tenant negligence, liability exposure, theft, and weather-related damages. Keeping these hazards in mind helps identify gaps in insurance coverage that additional policies or riders within the same plan can fill. You should also review the conditions set by mortgage lenders or local reg- ulations that might require specific and/or additional coverage.
NO. 2 LIABILITY COVERAGE. Liability coverage is another
crucial aspect of landlord insurance policies. It serves as protection for the owner against legal action if a tenant or uninsured third party gets injured while on the rental property. It’s intended to cover medical expenses, damages, or legal fees incurred in case of an incident stemming from negligence on behalf of the landlord. NO. 3 RENT LOSS. If a landlord experiences damage to their property that renders it uninhabitable, rent loss coverage can provide financial protection. This coverage typically reimburses part of or all lost rent and asso- ciated costs until the issue gets resolved and the owner can rent the property again. Other riders can be added to a landlord insurance policy at an extra cost depending on an investor’s specific needs. For example, you could add earthquake insurance to a property in an area where tremors occur regularly or flood insurance if the home is near bodies of water that periodically overflow.
TYPES OF INSURANCE COVERAGE TO LOOK FOR
Three main areas of coverage form the foundation of landlord insurance policies. Each one protects your property in critical ways.
NO. 1 PROPERTY DAMAGE. Property damage coverage
is a landlord insurance policy’s most fundamental and essential component. This coverage often protects against losses from risks such as fires, theft, vandalism , or weather-related damage. It’s also intended to cover all structural property elements (i.e., walls,
58 | think realty magazine :: may – june 2023
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